Minneapolis Federal Reserve President Neel Kashkari stated that it is premature to conclude that interest rates need to be raised at this time, though he believes the Fed should keep all policy options open.
Kashkari remarked during an event at Korea University in Seoul on Friday, "I believe it is too early to determine whether we need to raise rates immediately. We need to continue monitoring economic data and observe the developments in the Middle East conflict before I consider whether policy adjustments are necessary."
Fed officials kept interest rates unchanged at the April meeting. While Kashkari supported this decision, he was among the three policymakers who dissented on the wording of the post-meeting statement, which suggested that the Fed's next move might be a rate cut. Kashkari and two other colleagues advocated for more neutral language to signal that both rate hikes and rate cuts remain possible.
Like many Fed officials, Kashkari noted that the war in Iran has heightened uncertainty regarding the U.S. economic outlook. He also expressed caution about inflation, which has risen in recent months since the outbreak of the war, driving up energy prices and potentially prolonging the high cost of living pressures that U.S. residents have faced for five years.
The Minneapolis Fed official reiterated this position on Friday, pointing out that in both the most optimistic and pessimistic scenarios, inflation could remain significantly elevated for an extended period. He stated that he is closely monitoring this risk, as well as the possibility that inflation expectations could become unanchored.
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